Answered: What are the money markets and what are…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 13QP

See similar textbooks

Related questions

Question

What are the money markets and what are the capital markets? How do they differ? What are their respective activities?

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Expert Solution

Step 1

Money market:

1)Money market is a short-term market where instruements like commercial papers, treasury bills, certificate of deposits, etc.
2) The risk is low in the money market
3) It inlcudes instruments like: treasury bills, trade credit, certificate of deposits, commercial papers, and so on.
4) Investors in the money market are commercial bank, central bank, non-financial institutions, chit funds and so on.
5) Money market is highly liquid.
6) The money market is casual in nature.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions